Tuesday, February 4, 2014

The Benefits and Pitfalls of Score Board

Effective scorecards make the meaning of success tangible for the organizations. 

Scorecards are the performance management tool that compares strategic goals with results. This tool allows management to keep track of strategy implementation by aligning performance with goals. Balanced scorecard is the balanced scorecard model offers a way for a corporation to gain a wider perspective on its strategic decisions by considering the impact on finances, customers, internal processes and employee satisfaction

Scorecards make the meaning of success tangible for the organizations; one of the strengths in the scorecard is that they enable practical use of the success factors and performance management concepts. It puts these key success enablers in the spotlight for all team members and unifies their efforts to achieve the common goals. The scorecard measures periodic results (weekly, monthly, quarterly, annually) against a predetermined goal, allowing users to gauge how their performance stacks up against expectations.

 Well-designed Scorecards also help greatly with prioritization. It is too easy to be swamped by report and dashboards. The scorecard allows you to focus on the most critical issues and put all things in context. Scorecards translate your strategy into concrete terms and help you track its implementation. Scorecards also reflect operational issues; they are developed in a way that specifically directs attention to your strategy and future direction. 

The effective scorecards help to ensure that you have the right measures. A group of measures implemented without a well-thought-out performance model in mind or, worse yet, imposed from the outside, seldom bring new focus or drive desired actions. Effective scorecards are by nature, consciously and purposefully constructed. In building one, you develop a logical structure that helps everyone know what should be measured, what belongs on the scorecard and what does not belong. To put simply, an effective scoreboard is easy to measure and compare, helps to improve and evolve for sharing best practices within the team or cross the management.

Scorecards drive better performance. The evidence is clear that solid feedback enhances performance at all levels and across all organizational units. When people and groups throughout an enterprise know how they are doing and what needs improving, they do better. Therefore there is as much value if not more in a simple KPI rather than one that takes the time to create and implement. Effecting change requires fast and regular feedback and makes the desired behaviors 'instinctive'. 

Scoreboard Pitfall #1: When considering a scorecard, the main part of the challenge lies in building an adapted structure, in line with business objectives. Problems often come at this stage when too many measurements from the beginning are considered; often more than needed. And such proliferation of KPIs measurement will often prevent users comprehension because of too much distractive information, Then, getting a logical structure is a tough part of achieving and is not a one-shot process. Thus, it is better to start with a small structure that answers to your very first strategic questions and then make evolve the scorecard into a more complex, accurate and specific environment. 

Scoreboard pitfall #2: The commitment to fill the scorecard data input always becomes an issue, late report and incomplete data always shows up. The management needs to maintain the commitment if they really want to see their scorecard work well, and make sure that the management of the scorecards does not become an industry in itself. Technology is supposed to be simplifying routine tasks not generating more! Wherever possible automate the loading of data from the organization’s systems particularly for financial and operational data, you will have systems from which you can extract the relevant subset of information.

Scoreboard pitfall #3: Scorecards and databases must be aligned with strategies and KPIs. This sounds like a "no-brainer" but more often, scorecards fail miserably because they were designed in isolation, not taking into account corporate strategy, not identifying key stakeholders, introducing KPIs that can't be reported from the database, etc. Effective communication and the ability to build strong relationships are vital elements as well.



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